Last week, the Ontario Energy Board denied Toronto Hydro’s request for a rate hike for homes within the city limits. The hike, which would have meant a monthly increase of five dollars for a typical household, was necessary, Toronto Hydro said, to renew the city’s electrical transmission grid. Failure to do so, they warned, could result in more, and longer, blackouts.

Not so, the Energy Board ruled. They said that Toronto Hydro had not demonstrated that Toronto’s power grid needed the kind of urgent repairs that were being proposed, and also chided Toronto Hydro for failing to make necessary productivity gains, implying that the requested money was not so much about urgent repairs as needing more cash. Toronto Hydro’s response has been swift: 700 contractors have been let go, and 20% of its workforce is being told that they’re next — that’s another 350 or so jobs. Oh, and without the cash, the city is probably going to go dark.

Do these guys know how to play hardball or what?

It’s a complex issue (they always are when dealing with public utilities). Rates are going up across the province, but Toronto Hydro says it needs more to both replace aging equipment and recruit new workers, as necessitated by an aging workforce. The actual point of contention came when Toronto applied for a hearing to get the unusual hikes approved, and the Energy Board refused to hold the meeting. Having studied Toronto’s electricity grid, they found the reliability rates were comparable to the rest of the province, with no sign of unusual equipment issues. They also spanked Toronto Hydro for wanting special exemptions when they continue, in the view of the board, to not do enough to innovate and find productivity benefits without resorting to dinging ratepayers for more.

It doesn’t end there, though. The province has the ability to overrule the Energy Board and issue them a directive — say, for example, “Do what Toronto Hydro wants.” Clearly, Toronto Hydro wants that to happen, as does the branch of CUPE that represents the unionized Toronto Hydro employees. Toronto Hydro has made its position clear — we get the cash or else we let go at least 1,000 people and the city suffers from more, longer blackouts. Blackouts happen, of course, and you can bet when the next one does, it’ll be linked to this.

I don’t pretend to be an expert on the electrical grid, and couldn’t begin to tell you if Toronto’s power grid is as bad, or as stable, as is being suggested. My education in the intricacies of the power system stopped at, “Don’t stick your finger into the socket.” But it certainly seems odd, even to the untrained eye, that Toronto Hydro’s response to being denied an increase in future funds is to terminate existing jobs. One can’t help but suspect they’re sending a political message, with pink slips as the medium.

If they are, it’s a desperation play, and one that’s likely to explode (short out?) in their faces. The province will likely stay out of this, deferring to the Energy Board’s judgment, and thus absolving itself of any responsibility. And the Energy Board, having already made its position known, probably won’t be swayed by warnings about blackouts (which it has already rejected) or layoffs (which isn’t its problem). Besides, having already rejected it once, and for good cause, can you imagine how the people of Toronto would feel if they were told that, no, sorry, you’re going to have to pay more after all, just to avoid the unpleasantness? So this one might boomerang back on Toronto Hydro. If they back down before going after the union jobs, we’ll know they were bluffing.